Retailers Eye Electronics As Appliance, Furniture Sales Decline

That move to break into the specialty electronics market was high on the list of many of the several thousand independent retailers gathered at Nationwide Marketing Group's PrimeTime conference in New Orleans this week.

Vincent Whitten, district manager for Wichita Furniture, a Wichita Falls, Texas, independent retailer, was at the show looking to expand his company's technology offerings. "We want to add another dimension," he said of the furniture retailer, which wants to add computers and expand its television product portfolio. "We want the customer to do one-stop shopping and get it all from us."

Whitten was impressed by LG's televisions at the show. He sees electronics being a "huge" part of Wichita Furniture's business three years down the road.

The Nationwide Marketing Group, a $12 billion buying group for independent retailers, has recently added aggressively priced 19-inch to 47-inch televisions from Haier Electronics and laptop computers from Toshiba, said Michael Decker, vice president of marketing, electronics, for Nationwide.

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Robert Weisner, executive vice president and director of the Nationwide Marketing Group, predicted that Nationwide members carrying electronics products could easily jump from 500 retailers to more 1,000 in the next five years. He sees the convergence of computers and television opening up big opportunities for independent retailers that have up until now only offered televisions.

"Many of our traditional TV houses will gravitate to this convergence," Weisner said. "It's a huge opportunity because you really need a sales-assisted floor [business]. That's one thing [retail giant] Best Buy doesn't have." One Nationwide member that does $50 million in appliance sales annually is just now adding flat-panel display televisions to his stores, Weisner said.

Weisner said that Nationwide closed out last year with a record $12 billion in sales for its members with electronics up "substantially" and appliances and furniture down.

Nationwide is offering a wide range of retail merchandising television display solutions to its members. Not only that, Nationwide offers a service for retailers to put their own content on flat-panel TVs and get co-op funds from vendors for advertising to increase their margins.

Weisner said the demise of Circuit City and Tweeter, which offered a high-end TV/audio sales-assisted model, opens a big opportunity for retailers to move into electronics product offerings.

"Between Circuit City and Tweeter, at least $4 billion worth of TV business [is up for grabs]," Weisner said. He said that Nationwide conducted research aimed at helping its membership capture some of that $4 billion.

Doug Schatz, a former Circuit City division merchandise manager who joined Nationwide three weeks ago as vice president, merchandising, consumer electronics, said the lesson learned from the Circuit City bankruptcy is that "the customer is king and has to be taken care of properly. Our independent retailers are best equipped to do that."

Nationwide said it sees its rent-to-own retailers experiencing the strongest gains in the current economy. In fact, Weisner said Nationwide rent-to-own independent retailers are seeing up to 30 percent sales gains. One reason for that rent-to-own increase is that consumers are having a tougher time getting credit.

Whitten said his company's rent-to-own and leasing business is up 20 percent in the last eight months. Despite the economic downturn, he expects Wichita Furniture's sales to be up this year in part due to strong rent-to-own and leasing sales. He said the rent-to-own and leasing options make it "easier for consumers to get quality products without having to pay up-front."

Weisner, for his part, said it continues to be a tough and challenging market for retailers. That said, he said Nationwide members appear to be faring well. What's more, he said, Nationwide added several hundred new members in the last year.